Millennials aren’t as bad with money as everyone thinks

It seems like Millennials are sucking it up more than we think. They’re doing things their way, sure. They want better jobs, sure. They might even want to change the traditional boring office structure. But they’re still adapting to their financial reality.

Editor's note: This article originally ran on the personal finance blog Get Rich Slowly. It has been reprinted here with permission.

Last summer, I hung out with my brother on his college campus. He and his roommate live very much like typical college students — a fridge full of free food from my brother’s catering job, a hodgepodge of hand-me-down furniture, etc. Nothing terribly out of the ordinary with their lifestyle. They’re broke, but happy, twenty-somethings.

What I did find interesting was their view of money. They had a surprisingly frugal mindset and complained about the price hikes of everything from tuition to gas. They weren’t spending money on drinks every night; they were staying home and having fun for free or working so they could pay their meager rent but outlandish tuition. In short, my brother and his roommate definitely didn’t seem like the spendthrift, entitled and spoiled Millennials that I’ve been reading about recently.

(Side note: My brother says the word Millennial is annoying. But for the sake of succinctness, I’m going to keep using it in this piece. Sorry, bro.)

2013 was a popular year for the topic of Millennials and money. But up until very recently, all the stuff I was reading was negative. I’m guilty too. In a Get Rich Slowly post, I linked to an article about employment, and it ripped Millennials a new one. While I may have agreed with the sentiment of the article, I do think Gen. Y has unfairly been given a bad rap this year — they inherited a whole mess of money problems, and then they’re criticized for not having it together financially.

Here’s why I think Millennials might be better with money than others may be ready to admit.

A majority of them saved for college

Earlier this year, I was surprised to come across a Fidelity study that researched the money behavior of recent graduates and found that 85 percent of them contributed at least some of their own personal savings to their college tuition. And what’s even more surprising is that, of that percentage, 27 percent contributed more than $10,000. That beats what I saved for college: $0.

Millennials are paying their debts

A study from the Pew Research Center compared the debt of young adults with that of adults over the age of 35. In three years, (2007 to 2010), the median debt among the 35+ crowd dropped by 8 percent. The debt drop among Millennials? Twenty-nine percent. Six years ago, young people had nearly as much debt as older generations. More recently, they have about half as much.

But, sure, maybe trends and regulations in the past few years have made it harder on adults over 35 who own homes, for example. Maybe it’s gotten harder for older adults to pay off debt. Maybe it’s not fair to compare. But here’s an interesting stat that’s specific to Generation Y. According to PewSocialTrends.org: “ the share of younger households holding debt of any kind fell to 78%, the lowest level since the government began collecting such data in 1983.”

Experts say the drop has to do with Millennials continuing to postpone debt-inducing milestones, namely home and car ownership. But Pew found that there’s also been a significant decline in credit card debt among this generation.

“Younger households have pared their credit card balances. In 2010 only 39% of them carried a balance, down from 48% in 2007 and 50% in 2001. The median outstanding amount owed among younger households with balances has fallen over the decade from $2,500 in 2001 to $2,100 in 2007 and diminishing further to $1,700 in 2010.”

They’re sucking it up

We’ve discussed pursuing our passions a lot here. That’s something that graduates seem to struggle with: After college, do you keep looking for the job you went to school for, or do you take whatever job you can get? But despite the stereotype that Millennials are simply lazy and don’t want to work, the Pew Research Center found that half of them have taken jobs they don’t want so they can pay the bills.

Maybe that’s low compared with past generations — I couldn’t find any comparable data. But I do know that college is a lot more common and accessible these days, and we’re encouraged to pick a major so we can find a satisfying occupation. But then, when graduates actually try to hold out for that job, they’re lazy. And when this generation decides to postpone things like owning a car, opting to take public transportation instead, their decision is not viewed as a sacrifice; it’s considered not growing up.

Further, you’ve probably come across the statistic that 30 percent of young adults between the ages of 25 and 34 moved back in with their parents to either pay the bills or pay off debt. Generation Y gets ripped for that too, despite the fact that no one between the ages of 25 and 34 wants to live with their parents. And, in fact, about half of the young people that moved back in with their parents say they helped their parents out with rent.

It seems like Millennials are sucking it up more than we think. They’re doing things their way, sure. They want better jobs, sure. They might even want to change the traditional boring office structure. But they’re still adapting to their financial reality.

Millennials want to be frugal

Millennials like to go out and have fun and spend, but they want to find ways to do it for less. Their desire to be frugal may not be intense, but they’re definitely interested in saving money.

In an interview with the Wall Street Journal’s MarketWatch, Wendy Liebmann, CEO at WSL Strategic Retail, revealed a finding on the consumer behavior of Generation Y: “8 out of 10 of these shoppers say it’s important to get the lowest price on most things they buy, which is higher than any other age group.”

Their interest in frugality has also increased in recent years more than any other age group, Liebmann said. The study she cites isn’t the only to reveal that this age group shops frugally.

Then there’s the argument that Millennials are spoiled because they’re into brand-name Stuff. But most frugal people will tell you: It’s better to invest in quality items that will last than to purchase cheap, replaceable items regularly. Most of the time “quality” equals “brand-name Stuff.” I’m not saying that Millennials are into brand names solely because they’re applying that frugal adage. But if they were, it’d probably be obscured by the stereotype that they’re spoiled.

Young people struggle with the urge to spend, go out and drink and buy nice things. People of all ages have that same struggle. But Millennials seem to be aware of their financial situation and the general dark cloud that looms over the economy. They seem to be adapting by finding cheaper ways to give in to their cravings.

Duh: Millennials are young

Recently, I came across a study that criticized the Millennial generation for the many ways that their spending habits are influenced by keeping up with their friends. That was really shocking, to learn that young people are susceptible to peer pressure.

I feel like the things we criticize Millennials for have less to do with their generation specifically and more to do with, simply, the mindset of youth. They’ve been called “entitled” and “unrealistic” and “spoiled.” Those are the same scathing words I’ve heard people in other cultures use when describing Americans. That’s the stigma we carry. It’s not surprising that young people who live in a culture that honors consumerism and the American Dream want to consume and have dream careers.

Generation Y didn’t invent entitlement and consumerism. If we’re all so much better than this generation, debt wouldn’t be such a problem. I’m not saying we’re totally to blame and we’re terrible people for having a mortgage and other debts to pay. Certainly, when it comes to a country’s economic trends, there are larger factors at play. I just find it ironic that we’re so quick to belittle an entire generation that, really, is just a younger version of our society as a whole.

We’ve all been there. The only difference between twenty-somethings of the past and twenty-somethings now is that this group went through the Great Recession. But in many ways, I think that’s given them a healthier financial outlook.

One more Pew study: Kim Parker, the associate director at the Pew Research Center, said this about one of their Millennial studies:

“In spite of hardships, they do have a real sense of optimism. They feel they have so much time ahead of them and that things will work out,” she says.

It’s idealistic, but that’s a pretty good attitude for a group of people that grew up in a recession and won’t have Social Security. But again, that’s how young people are. They’re optimistic. That optimism, mixed with a greater awareness about money issues is, I think, a good recipe for financial savviness. The idealism may wear off. That dark cloud may start looming a little closer to home. But we all grow up and adapt to our experiences and surroundings. I think recent trends show Generation Y is doing just that.